Public Infrastructure Nature Of Project No Bar To Interim Relief Under Arbitration Act: Bombay High Court

The Bombay High Court has ruled that the public infrastructure nature of a project does not, by itself, prevent courts from granting interim protection under the Arbitration and Conciliation Act.

It observed that courts must balance the parties' commercial rights while ensuring that public projects are not delayed.

"Merely because the project relates to public infrastructure, it does not take away the jurisdiction of this court under Section 9 of the Arbitration and Conciliation Act. The court is required to balance the competing interests of both sides. While ensuring that the public project is not delayed, the court must also see that rights of the parties are not defeated before the disputes are adjudicated by the learned Arbitral Tribunal," Justice Amit Borkar observed.

The order was passed while partly allowing an interim petition filed by Arkawelle Infra Private Limited against Carbon Minus Energy Private Limited and others. The dispute concerns a 505 MW solar power project in Maharashtra. The court restrained Carbon Minus Energy from transferring any remaining obligations under the Letter of Award and the Agreement of Association to third parties. Transfers already made will remain subject to the outcome of arbitration.

It all started after the Maharashtra State Electricity Distribution Company Limited (MSEDCL) tender issued on March 15, 2024. It invited bids for developing 1,052 MW of grid-connected solar projects on Water Resources Department land for lift-irrigation schemes across the state.

Carbon Minus Energy emerged as the successful bidder. On March 25, 2025, it issued Arkawelle a letter of Award for executing EPC works and one year of operation and maintenance for a cumulative 505 MW solar project. The contract was valued at ₹1,616 crore.

The parties executed an Agreement of Association on April 14, 2025. It also contemplated a proposed 30% equity participation, with the transfer linked to achievement of project milestones.

Arkawelle alleged that Carbon Minus Energy never handed over any demarcated project land despite repeated requests. It said Carbon terminated both agreements on June 21, 2025, alleging subleasing, solicitation of earnest money deposits and circulation of false statements. Arkawelle denied the allegations. It maintained that work could not begin because the land was never handed over.

Arkawelle also claimed Carbon later withdrew from a proposal to restore the original allocation. It further alleged that a part of the EPC work was awarded to Surya Electro Multi Services Private Limited, while another portion was allocated to Vikran Engineering. It then approached the high court seeking interim relief.

Carbon Minus Energy opposed the petition. It argued that Clause VIII(a) of the Agreement of Association required arbitration in Chennai. It also contended that Arkawelle had bypassed the agreed consultation and mediation process, that the contract was determinable, and that granting an injunction would obstruct or delay a public utility project.

Reading the Letter of Award together with the Agreement of Association, the court observed that both documents formed part of the same commercial arrangement. It also found, prima facie, that the proposed 30% equity stake was linked to contractual milestones and had not automatically transferred when the agreement was executed.

"However, merely because an agreement provides for future transfer of shares, it cannot immediately be presumed that such shares stood transferred on the very date on which the agreement was executed. The court cannot read one clause alone by ignoring the remaining provisions of the agreement," it observed.

The court observed that disputes over land handover, termination, equity participation, and subsequent allocation of project obligations involved disputed questions requiring detailed evidence before the arbitral tribunal. It nevertheless found interim protection necessary to preserve the subject matter of arbitration.

Accordingly, the court directed Carbon Minus Energy and its special purpose vehicle to disclose the project's current status within four weeks. It also directed Arkawelle to commence arbitration within the same period. The court declined to grant a charge over the proposed equity, appoint a court receiver, or order wider asset disclosure.

For Petitioner (Arkawelle Infra Private Limited): Advocates Shekhar Jagtap, Sairuchita Chowdhary.

For Respondents (Carbon Minus Energy Pvt. Ltd. and others): Advocates Shilpa Kapil, Chidanand Kapil, Vishwabharati Devkhile.